First brief due October 24

The first plaintiffs’ brief to the Colorado Supreme Court is due on October 24. It will be followed by three additional briefs about 40 days apart in order of defendants’, plaintiffs’, and defendants’ briefs. The supreme court has not ordered any procedures beyond this, so the next steps after the briefs are not known. Our attorneys are carefully preparing the first brief to address the three questions that the supreme court has accepted to address. Those questions are listed in the post below this one.

We continue to receive donations to cover our commitment to our law firm Feinstein Doyle Payne & Kravec, LLC www.fdpklaw.com . We are especially appreciative of the several retirees who each month make substantial donations. Rest assured that these donations are forwarded in full to the law firm in batches. We also thank those who send their kind words of encouragement to us. This is indeed a group effort. If you wish to donate, click on www.saveperacola.com/support.

Rich and Gary

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8 Responses to First brief due October 24

ILLINOIS SENATE PRESIDENT: THE PUBLIC PENSION “CRISIS” HAS BEEN MANUFACTURED TO LOWER TAXES.

To the extent that state legislatures (such as the Colorado General Assembly) can break state contracts, escape their debts, ignore state constitutions, and push the debts of all taxpayers onto a small group of pensioners . . . well, taxes can be further reduced, and votes will be won. Politics is a ruthless, dirty business. Politicians are not beyond using the force of government to illegally seize property to curry political favor. Only the courts can prevent such immoral, extralegal behavior.

As we have seen, the Colorado General Assembly has skipped out on its Colorado PERA public pension bills for a decade, and now seeks to escape its accumulated pension debts through breach of Colorado PERA pension COLA contractual obligations (SB10-001.) For several years now, Illinois’ politicians have also toyed with the idea of taking contracted, accrued, earned, “automatic,” public pension COLA benefits in order to escape their debts. After all, the State of Illinois is the poster child of public pension mismanagement and underfunding among the states. Illinois Senate President John Cullerton has been among those pondering a potential pension contract breach, a contract breach advocated by corporate interests in his home state. Yesterday, (October 20, 2013) Senator Cullerton finally admitted what public pensioners in the United States already know. This modern public pension “crisis” in the United States has been manufactured, and promoted by corporate interests seeking to lower their tax burdens. In Colorado, lobbyists for the business organization, Colorado Concern, supported the bill taking contracted PERA COLA benefits in 2010, SB10-001.

In the 1950s, public pensions in the U.S. typically had funded ratios in the 50-60 percent range. Several U.S. public pension systems currently have comparable levels of funding. Yet, in the 1950s, no claims of a financial “crisis” among U.S. public pension systems were made by politicians overseeing these pension systems. Why is this? Answer: In the 1950s, a well-funded, self-interested, corporate noise machine promoting such a public pension “crisis” did not exist.

Chicago Tribune:

“Illinois Senate President John Cullerton said Sunday that the state’s massive public employee pension debt is not a ‘crisis,’ but instead an issue being pushed by business-backed groups seeking lower income taxes at the expense of retiree benefits.”

“‘People really misunderstand the nature of this whole problem. Quite frankly, I don’t think you can use the word ‘crisis’ to describe it at the state level,’ Cullerton said in an interview on WGN-AM radio.”

“‘It’s something we have to deal with, but it’s not something that we’re on the verge of bankruptcy on,’ Cullerton said.”

“A bipartisan House-Senate panel has been meeting since June in an attempt to come up with a plan to alter retirement benefits without running afoul of a state constitutional prohibition against diminishing or impairing pensions.”

“Still, Cullerton said that under a 1996 law aimed at gradually boosting the amount of money put into the state’s pension funds to eventually get them funded at 90 percent of their liability, payments to the retirement systems are already near their highest level and require only small annual future increases to stay on track.”

“As a percentage of state general revenues, pension payments would continue to be about one-fifth of the state’s general revenues through 2044, his office said.”

(My comment: Colorado’s public pension obligations are a fraction of the pension obligations of the State of Illinois. These obligations represent a few percentage points of revenue that will be received by Colorado governments over the next five decades, an insignificant portion of future Colorado state GDP. Nevertheless, in 2010, many Colorado politicians were persuaded by lobbyists to attempt the PERA COLA contract breach, taking one-third or more of a pensioners contracted benefit.)

Chicago Tribune:

“But the Senate president also noted that the state’s personal income tax rate is scheduled to fall from 5 percent to 3.75 percent, and the corporate rate is supposed to drop to 5.25 percent from 7 percent in 2015. The loss of revenue is estimated at about $5.4 billion.”

“‘But the pension reform then is about tax reduction — not about the solvency of the pension fund or about diverting money to spend more money for education,’ he added.”

(My comment: Colorado politicians, former Governor Bill Owens in particular, have made a habit of cutting state revenues that would otherwise be available to meet Colorado state contractual obligations. Governor Bill Owens also advocated and signed legislation that shifted labor costs from Colorado governments to the PERA pension system. Having cut available revenues, skipped PERA pension payments, mismanaged the PERA pension system, effectively borrowed from the PERA pension trust funds, and run up the Colorado PERA debt, Colorado politicians now pursue their “solution,” namely, abrogation of state contracts.)

Chicago Tribune:

“Cullerton said the conference committee’s pension framework represents savings equivalent to lowering the state income tax by 0.25 percent.”

“‘That’s really what it’s about. Now, I wouldn’t call that a crisis. I think people should put that in perspective,’ he said. ‘Keep in mind, it’s not going bankrupt. The money that we save by lowering those benefits is going to be used to lower the tax rates.'”

“Cullerton contended top business organizations were pushing the pension changes for the benefit of lower taxes and that the public was generally supportive because many people have been moved to 401(k)-style defined-contribution plans from the defined-benefit type of plans that state retirees receive.”

“The Chicago Democrat told WGN Radio that the pension shortfall is not an imminent crisis, but that finding a solution can help keep Illinois’ income taxes down.”

“Cullerton made the remarks as lawmakers head back to Springfield to begin their fall veto session Tuesday. They face considerable pressure to deal with the pension problem, considered the nation’s worst.”

A few interesting comments made on yesterday’s Chicago Tribune article:

“If there is any crisis (in Illinois) then it was caused by lowering taxes, and by giving tax incentives to corporations, in the first place. Let’s not lose sight of the fundamental issue: the state and localities failed to pay MANDATED pension contributions (‘borrowing’) and now refuse to repay the money they ‘borrowed’. This is wage theft, pure and simple. If the state refused to pay out tax refunds – claiming it was borrowing them – and then years later said ‘sorry, we won’t repay you the money we borrowed’ it would be called a default, and the interests pushing to steal pensions now would be outraged.”

“This is a zero sum game, that the 1% don’t want to lose, Simple as that.”

Illinois’ Corporate Interests Lobbied for a Downgrade of Illinois State Debt to Support Their Manufactured Pension “Crisis.”

“Not only was (Ty) Fahner (of the Civic Committee of the Commercial Club of Chicago) open about how aggressive the lobbying by the CEOs for the downgrade had been, and didn’t disagree with the questioner who called it irresponsible (as in ‘we know we are doing harm to promote what is good for us’), he said they’d had to back off because they didn’t want their handiwork to be too visible, and was exhorting people in the room to take up the campaign for him.”

“I asked a colleague who had worked for Moody’s in the 1990s why outside parties were allowed to influence ratings.”

“When I first read about the downgrade, my reaction had been that Rahm must have pushed for it. My colleague had a similar reading.”

“Also, I’m pretty sure I read in last couple of days that Rahm himself lobbied Moody’s to downgrade his state.” “. . . I’m sure his hedge fund buddies taught him all about it.”

An Illinois pension conference committee has been appointed to consider “reform” of Illinois’ pensions. The conference committee is chaired by Senator Kwame Raoul, a very engaging politician who has been, unfortunately, sucked into the Illinois pension conspiracy.

Instead of enactment of PROSPECTIVE, LEGAL public pension reform measures, Senator Raoul recently expressed support for shifting the debts of all Illinois taxpayers onto the backs of a relatively small group of the state’s elderly. Illinois’ plutocrats are smiling.

“Sen. Kwame Raoul, Chicago:

Raoul, the committee chairman, who considered a campaign for governor, says he remains optimistic a plan can be brought for a vote in the coming weeks. Last spring he supported a Senate-backed plan that would have given retirees an option of the benefits received during retirement, saving $58 billion according to Senate estimates. He now is pushing the $138 billion savings plan. It includes a provision that would reduce a current 3 percent annual compounded cost-of-living adjustment in retirement benefits to half the rate of inflation and a reduction in employee contributions by one percent — a concession to state employees for other sacrifices.”

“It’s identical in that aspect (the plan’s primary component is changing a 3 percent compounded cost-of-living increase to a percent equal to half of the inflation rate).”

“One of the attractive aspects is the notion of inflation protection for the employees and retirees. And that’s attractive both from just a moral standpoint and from making an argument of constitutionality in terms of having something offered.”

(My comment: Senator Raoul, breaking a contractual public pension COLA obligation is not at all “attractive from a moral standpoint,” nor is it “constitutionally permissible.” Taking something from a person is not giving something to a person. Illinois’ public pensions have “automatic,” contracted COLA benefits. Public pension COLA benefits are deferred compensation, presently earned. It looks like Kwame wants to see the State of Illinois “inflate away” its pension debt, by taking money from the elderly.

Note that some members of the Illinois Legislature are at least paying lip service to the constitutionality of reform proposals [proposing that something must be “offered” to Illinois pensioners to compensate for the theft of their contacted COLA benefits.] In 2010, the Colorado state legislators who supported the breach of fully-vested Colorado PERA pension COLA contractual obligations made no pretense of “offering” anything to affected PERA pensioners. The 2010 Colorado PERA pension COLA taking was brazen.)

A pension reform bill in Illinois will not pass court muster if a “less drastic” reform is available to the Legislature. Numerous “less drastic” public pension remedies are indeed available to the Illinois Legislature. The Illinois Legislature could simply extend its recent income tax hike to pay down the state’s pension debt. This solution has the advantages of unquestionable morality and constitutionality. It is perfectly legal and moral for governments in the United States to pay off their accumulated debts.

The State of Illinois could impose a financial transaction tax that would be collected by securities exchanges in the state. Dozens of nations around the world impose such a “FTT.” A one dollar tax per transaction on Illinois exchanges (a fraction of the level of such assessments in place in other countries) would raise billions of dollars, have an inconsequential impact on the securities industry, and allow the State of Illinois to pay its accumulated debts. The FTT would be paid by the industries that created a real financial crisis in 2008-09, driving down public pension funding ratios. The Illinois Supreme Court should take note of the fact that the imposition of a small FTT to meet Illinois’ contractual obligations is manifestly a “less drastic” option than the breach of Illinois state contracts. IF THE STATE OF ILLINOIS BREAKS ITS PUBLIC PENSION CONTRACTS, THIS BREACH OF CONTRACT WILL HAVE BEEN A CHOICE RATHER THAN A “NECESSITY.” Illinois public employees did not cause the pension crisis, they have made uninterrupted pension contributions, unlike the State of Illinois.

The Illinois Legislature could consider reforming the state tax system, closing corporate tax loopholes that cost the state billions of dollars. The Illinois Legislature could consider re-amortizing the state’s pension debt over the life of the debt, 50-70 years. (See Ralph Martire’s public pension refinancing plan for Illinois.

The Illinois Legislature might consider lowering the rate of FUTURE accrual of pension benefits in the state by reducing the public pension “multiplier” on a PROSPECTIVE basis (for pension benefits not yet accrued.) See Professor Amy Monahan’s paper: “Public Pension Reform: the Legal Landscape.” She is Professor of Law at the University of Minnesota School of Law, and the foremost expert in the U.S. on public pension contractual obligations.

But, let’s be clear . . . taking “fully-vested,” contracted, earned, and accrued public pension COLA benefits from current Illinois retirees is the MOST DRASTIC idea that has been put forth at the Illinois Legislature.

A question for Senator Cullerton: Is one pregnant woman “less pregnant” than another pregnant woman?

Another means by which Illinois’ public pensions might be bolstered is elimination of the Illinois property tax breaks that have been won in the past by Illinois House Speaker Madigan’s law firm and Senator Cullerton’s law firm for various business interests, and use of the resulting state revenues to meet the state’s contractual public pension obligations:

“Chicago Ald. Ed Burke, chairman of the City Council finance committee; Illinois House Speaker Michael Madigan; and Illinois Senate President John Cullerton. Their firms have collectively won more than $114 million in property tax refunds for Cook County businesses since 2003, according to the Sun-Times analysis.”

Colorado PERA active and retired members. The campaign to break public pension contracts is nationwide and well-funded. It is imperative that, in Colorado, we continue our small part to defend the contracts of vulnerable, politically weak public pensioners. It is critical that we stand up for rights guaranteed under the U.S. Constitution. Contribute at saveperacola.com. Friend Save Pera Cola on Facebook!

The Colorado Legislature has not paid its full public pension bill for a decade. By failing to pay its pension bills, the Colorado Legislature has effectively borrowed from the trust funds of the Colorado PERA pension system to finance state and local government operations.

In 2010, rather than paying back the money “borrowed” from the Colorado PERA pension system, rather than meeting contractual obligations and paying accrued debts, a majority of Colorado state legislators decided to attempt to break the state’s pension contracts. Few Colorado residents know about this ongoing contract breach by the State of Colorado, since most of Colorado’s media tacitly support the Colorado attempt to further cut taxes in our state through breach of contract.

Like the Colorado Legislature, the Virginia Legislature has also failed, historically, to pay its public pension bills (called the pension ARC), but rather than enacting legislation to attempt a pension contract breach, Virginia state legislators now propose to actually pay their debts. What a concept!

From the Times Dispatch:

“Currently, the state is paying about 70 percent of the pension contributions required by the VRS, but Gov. Bob McDonnell and the General Assembly agreed last year to require the state to gradually increase its contributions to 100 percent of the requirement in six years.”

As we have seen, the Colorado General Assembly has not paid its full Colorado PERA public pension bill (ARC) for a decade.

2012 PERA CAFR, page 35 – “ARC Deficiency.”

“In 2012, the actual (PERA) contributions, as set in statute, were $143.4 million less than the ARC as calculated by the actuaries.”

“During the past 10 years, this shortfall in funding . . . has been $3.4 billion.”

It is exceedingly ironic that the amount by which the Colorado Legislature underfunded its contractual PERA pension system obligations (in just 2012) is almost exactly the amount of money that the Colorado Legislature appropriated in 2013 to pay for public pensions that ARE NOT the contractual obligation of the State of Colorado.

It is simply incredible, but the Colorado Legislature, while failing to keep up with its own contractual pension obligations has transferred a total of $700 million of state funds to pay for local government pensions (Old Hire Fire and Police legacy pension debt) that is not the legal responsibility of the State of Colorado. That’s sort of like skipping your own mortgage payment to pay your neighbor’s mortgage. Your neighbor is happy, but your own mortgage company? Not so much.

When a group of lobbyists is able to persuade elected officials to skip paying their own contractual obligations, in order to meet the contractual obligations of other organizations, rest assured that either these lobbyists are very talented, or the elected officials involved have so little knowledge of their pension obligations that they are easily manipulated. In 2010, 27 Colorado statehouse lobbyists were registered as supporting the bill that seized Colorado PERA retiree assets, SB10-001. Colorado legislators have relatively little knowledge of public pension administration and contractual obligations due to the fact that Colorado PERA pension administrators, lobbyists, and many Colorado public sector union officials find financial benefit in this ignorance. These self-interested parties cut a pension COLA contract breach deal with the Leadership of the Colorado Legislature in 2009, thus an interim study committee (that would have educated Colorado legislators in the area of public pension contractual obligations) was never appointed by Legislative Leadership.

From the Richmond (Virginia) Times-Dispatch:

“‘We were well aware it was going to be a significant number when we agreed to the reforms,’ said Del. S. Chris Jones, R-Suffolk, chairman of the House Appropriations subcommittee on compensation and retirement. ‘We’re not surprised at all.’”

“Sen. John Watkins, R-Powhatan, was the main sponsor of the reforms, including the escalating requirement on state pension funding.”

“‘That was the deal we made,’ Watkins said Wednesday. ‘Nobody is going to be happy with it, but that was the deal.’”

“The state has underfunded VRS so much that they had to pass a law so they could partially fund it,’ said Henrico County Manager John A. Vithoulkas, who expects a significant increase in the county’s share of teacher pensions.”

“The state still is not paying its full share of required pension contributions, which then increase unfunded liabilities.”

“’Every time the full contribution is not paid, that adds a little bit to the unfunded liability,’ Fernandez (Jose I. Fernandez, principal actuary for the VRS and its consulting firm, Cavanaugh Macdonald) said.”

(From a publicsectorinc.ord article:

“If people are willing to look the other way at corruption in investments, they’re willing to look the other way at deliberate [public pension] underfunding, which I consider corruption as well.”

“So the state is only putting in 50% of what they’re supposed to, and negative cash flows have actually hurt and dampened the investment return. When you continue to underfund the ARC, it messes up all the usual [pension] mathematics.”

“I’m more of a proponent for government in general, and I think that holding them to the ERISA standards [federal standards for private sector pensions] would get rid of a big portion of the corruption that’s out there. A corporate pension plan could not pay half the payments for ten years like the states like Kentucky and Illinois have done. Those guys would be in jail. I think that public pension plans should be held to the same standard as corporate defined benefit plans. There may need to be some type of federal bailout. If there is, we want some accountability.”

“The estimate, first given to lawmakers in July by VRS Director Robert P. Schultze, has been proved accurate by an actuarial study that recommends an increase of about 3.5 percent of pay for state employee pensions and nearly 3 percent for teacher retirement just to cover 80 percent of the system’s long-term liabilities.”

“The plans remain underfunded, based on the assets available to pay long-term unfunded liabilities.”

“The state employee plan, with about $7.4 billion in unfunded liabilities, has a funded status of 65.1 percent. The teacher plan, with $15 billion in unfunded liabilities, has a funded status of 62.1 percent.”

“Ideally, the plans should be at least 80 percent funded, but the retirement system is still recovering from the stock market crash and recession, which slashed the value of its investments nearly 22 percent in 2009.”

(My comment: Of course, equity markets have more than doubled in recent years, and in any event, public pensioners in DEFINED benefit plans bear no market risk under their statutory contracts. Colorado PERA pension administrators seem to have forgotten this fact.

Note that the 2010 bill taking contracted PERA retiree COLA benefits, SB10-001, proposes to continue the theft of contracted PERA pension benefits until the Colorado PERA pension system achieves a 100 percent funded ratio. That is, the Colorado legislators who voted for SB10-001 in 2010 propose to continue taking PERA retiree assets to cover state and local debt until the pension system is funded at a level 20 percent higher than the level considered to be “well-funded” for public pensions. The pension administrators and lobbyists who developed the scheme to take property from Colorado’s pensioners in 2009 decided to “Go Big.”

Virginia Attorney General Kenneth T. Cuccinelli in the Harvard Journal of Law and Public Policy – “Judicial Compulsion and the Public Fisc – A Historical Overview,” September 13, 2011.

Cuccinelli:

“It is widely thought that a funded ratio of about 80 percent or better [is] sound for state and local government pensions.”

“One factor militating in favor of challengers [to public pension contract breach] is that the state is entitled to less deference in the question of reasonableness and necessity, the third prong, when it exercises its sovereign power in a manner that benefits itself.”

“Attempts to change the [public pension] benefits of the retired, those qualified to retire, and voluntary participants in contributory programs probably would not be worth the effort.”

“The legislatures in all states have great discretion in altering benefits prospectively for those to be newly hired.”

“Pressure on contribution rates also is expected to ease as new employees enter the public workforce with reduced pension benefits under reforms enacted in 2010 and again last year. But the new hybrid retirement program adopted last year for state and local employees will not begin applying to new hires until Jan. 1.”

“The law that imposed the hybrid — a combination of limited pension benefits and a 401(k) style contribution plan — also requires the state to fully fund its share of pension plans by the fiscal year that begins in mid-2018.”

(My comment: Note that the Virginia Legislature has adopted PROSPECTIVE legislation to reform Virginia public pensions, whereas the Colorado Legislature had enacted blatantly RETROSPECTIVE legislation [SB10-001] addressing the Colorado PERA pension system. Oddly, after having adopted such retrospective legislation, taking accrued benefits from retirees in the Colorado PERA pension system in 2010, two years later the Colorado Legislature adopted SB12-149 honoring the accrued pension benefits of retirees in Colorado county government pension systems. So, if you happen to be a retiree in certain county government pensions in Colorado, your pension contract is honored. On the other hand, if you are a Colorado PERA retiree in Colorado, your pension contract has been abrogated. A constitutional double standard on public pension contracts is now enshrined in Colorado law.)

Colorado PERA active and retired members, clearly, the power that lobbyists have to manipulate members of the Colorado Legislature, and in particular the power of lobbyists for Colorado PERA-affiliated employers, deserves extensive scrutiny. In SB10-001, the Colorado Legislature gave these lobbyists access to the Colorado PERA pension trust funds, through the front door.

Support public pension contractual rights and the rule of law in Colorado. Contribute at saveperacola.com. Friend Save Pera Cola on Facebook!

Al,
Thank you for all your research and diligence on this issue. In following you I am now familiar and encouraged by our position but wonder what the strengths, if any, the opposition has for their position. Is there anywhere we can view and evaluate their salient points? Also what are our weaknesses?
Again thank you.

Hi DFD, here is an (incomplete) response to your question. Last June, I tried to distill what I believed to be some of the strongest arguments for the plaintiffs in the case. Here is a link to that article:

Also, I think that Rob Gray of PERA was clearly describing a PERA COLA contractual obligation in testimony to the Legislature on March 24, 1993. Members of the legislative committee agreed with his assessment of PERA COLA benefits as “guaranteed” . . . an offer that PERA retirees could rely on, a PERA liability:

March 24, 1993 (1:32 PM – 2:28 PM)

Rob Gray, Director of Government Relations, Colorado PERA testifying to the Legislature’s House Finance Committee in regard to the “automatic” PERA COLA benefit under consideration [in House Bill 93-1324]: “The PERA Board does support this bill.” “We felt like it is something that is good pension policy . . . that it makes sense . . . THAT IT IS MAKING PERMANENT CHANGES, and also that it does help employers which is one of the goals of the bill.” Rob Gray states that the proposed COLA “adds predictability for current and future retirees, people looking at leaving might look at this and say now I know how my future increases are going to be determined . . .”. Rob Gray characterizes the “automatic” PERA COLA benefit as a Colorado PERA liability: “when a change in benefits is added, like this bill, it extends out the period for paying off that unfunded liability.” If you listen to the recording of this meeting, you will also hear a member of the House Finance Committee refer to the Colorado PERA COLA provision under consideration as a pension benefit that is “guaranteed,” “now and in the future.” [Note that the contracted PERA COLA benefit adopted by the committee was in later years improved by the Colorado General Assembly to flat 3.5 percent level, constitutionally permissible as this “improvement” did not impair PERA pension contracts.])

Some of the weaknesses of PERA’s case were noted by members of the Court of Appeals during oral arguments thirteen months ago. Here is a link to audio of the fascinating oral arguments:

I think it’s quite damning that Colorado PERA’s lawyers have, in testimony to the General Assembly (JBC), stated that the PERA COLA is a contractual obligation of Colorado PERA-affiliated employers. I suppose that a more comprehensive list of strengths and weaknesses might be assembled by reading through the hundreds of pages of commentary that have been posted here at saveperacola.com. Since there has been no fact finding in the case yet, the arguments relating to fact haven’t come into play.

In their propaganda supporting the 2010 breach of pension contracts in our state, Colorado PERA administrators have tried to justify (in part) the abrogation of state and local pension contracts by noting the support of public sector unions for the “COLA-taking” bill, SB10-001. As we read on the Colorado PERA website:

“In Colorado, Senate Bill 1 passed with the support of the Colorado Coalition for Retirement Security, which brought together Friends of PERA (which includes PERA members and retirees), the Colorado Education Association, the Colorado School and Public Employees Retirement Association, AFSCME Colorado, the American Federation of Teachers Colorado, the Association of Colorado State Patrol Professionals, the Colorado Association of School Executives, and Colorado WINS.”

I have suggested, in the past, that this support may have been motivated by the fact that active union members (of course) pay union dues, while retired union members no longer contribute to union coffers. Did this economic reality motivate union officials to “toss retirees under the bus” in 2010? Did public sector unions support the taking of PERA retiree assets in order to minimize future PERA contributions that might be needed from their active members? Why did we not see Colorado’s public sector unions insist that Colorado PERA-affiliated employers actually pay their annual pension bills and meet their contractual obligations in 2010?

In a recent article AFSCME (International) writes:

“The very Wall Street-backed politicians who raided and underfunded the pension systems in the first place are now ‘using scare tactics and lavishly funded PR campaigns to cast teachers, firefighters and cops – not bankers – as the budget-devouring boogeymen responsible for the mounting fiscal problems of America’s states and cities,’ he writes.”

“AFSCME, if you really believe this post, why did you allow your affiliate, AFSCME Colorado, to support the breach of Colorado PERA pension contracts in 2010, after the Colorado Legislature had underfunded the pension for a decade? The Colorado Legislature failed to pay its pension bills for a decade, essentially borrowing from the pension fund, now they seek to shift their debt onto the backs of retired public sector workers. It’s sick, but your own people supported this in 2010. Visit saveperacola.com.”

I received a response from a former AFSCME Colorado official:

“Actually Al, that isn’t what happened: The rank and file members of Colorado State Employees AFSCME Local 821 had their local dissolved by a unilateral decision of AFSCME International and the Executive Board of Colorado AFSCME Council 76, prior to the sellout, as they were to be ‘incorporated’ into the Colorado WINS ‘partnership’ created with Ritter: without their consent or even being given the right to vote on the matter. The AFSCME ‘representatives’ who endorsed the PERA plan (i.e. Vivian Stovall and company) weren’t even state employees: they were members of Denver City employees AFSCME Local 158, who aren’t even covered by PERA. The Colorado State AFSCME retirees (Phyliss Zamaripa, Kathy Bacino, and Guy Santo) opposed the PERA plan put forth by Ritter, Schaffer, and Penry at the public hearing where proponents were allowed to testify first, and at length while opponents had their testimony relegated to the end of the hearing, and had their testimony time truncated. So please don’t give the impression that the rank and file members of Colorado State AFSCME Local 821 had anything to do with this sellout, because we didn’t. Give the credit to where it is due: Give it to Colorado WINS, and the SEIU.”

My response:

“Thanks for this new information. I have noted that Colorado AFSCME supported the PERA pension contract breach since Colorado PERA has made this claim in its propaganda. Al”

(My comments: Vivian Stovall is identified as having supporting the PERA COLA pension contract breach in 2010. She represents the interests of Colorado’s elderly on the Colorado Commission on Aging [appointed by Governor Ritter] and has worked for the Alliance for Retired Americans Colorado. She has also served on the State Central Committee of the Colorado Democratic Party.

“Vivian Stovall, Chairperson of the Colorado Commission on Aging, was appointed to represent the aging population.”

I find it odd that a person who represents the interests of Colorado’s elderly would support legislation breaking the fully-vested pension contracts of the elderly.)

And another reply from the former AFSCME official:

“The entire AFSCME endorsement of screwing public employees out of their pension COLA’s in Colorado is unfortunately quite true, however, it should be remembered that AFSCME no longer represents Colorado State Employees, and it hasn’t for about 7 years now. It was decided 7 years ago in a backroom deal in Washington that the three state employee unions would become Colorado WINS. The rank and file members of AFSCME Locals in Colorado were not given the right to vote on this, nor were the members of CAPE or the CFPE. The people who espouse ‘democratic labor trade unionism’ in America, wouldn’t allow it to take place in Colorado. Ritter and company granted a an exclusive franchise to Colorado WINS (which is a subsidiary of SEIU) and Colorado State employees do not have the right to belong to any other union, as both Change To Win and the AFL-CIO have prevented other unions (such as the CWA, which has had a consistent record of fighting for public employees’ pensions) from organizing. Thanks to their betrayal of Colorado State employees, Colorado AFSCME Council 76 is now a bankrupt shell of an organization that represents some county employees in Pueblo, city employees in Aurora, the remnants of Denver City employees Local 535 and 158 and the maintenance staff at DU. They have one ‘assistant Executive Director’ and two clerical workers for a staff. All they are is a paper tiger, shell organization that is used as a conduit to ‘move money’ in state elections.”

My response:

“That seems rather disingenuous on the part of Colorado PERA to attempt to rationalize the COLA-taking by citing the support of AFSCME Colorado, if AFSCME Colorado does not actually represent any employees in PERA.”

“Have you ever heard any sort of an explanation from Colorado WINS for breaking PERA contracts? I have always assumed it was to minimize future contributions that might be needed from active Colorado WINS members. To the extent that money can be taken from PERA retirees, the needed pension support from current workers is diminished, not a very good reason to trash the Colorado Constitution.”

Former AFSCME official:

“Yes, doesn’t it? But then again, let us not forget the first piece of legislation that Colorado WINS supported was the bill written by Democratic Senator Dan Gibbs to do away with state employees having the right to strike or engage in labor stoppages. The ‘S’ in AFSCME is supposed to stand for ‘State’ but the International of AFSCME basically gave up on Colorado when Wellington Webb failed to deliver his campaign promise to give Denver City employees collective bargaining. The grand plan was ‘First we’ll get collective bargaining for Denver, then we’ll repeal 8-73-104 (C) of the Colorado Labor Peace Act, and get all public employee’s collective bargaining rights.’ After they realized that wasn’t going to happen, Gerry McEntee, Paul Booth, and Larry Scanlon decided to cut their losses, and ‘traded’ the Colorado State Employee locals to the SEIU which had acquired CAPE (that had gone into virtual bankruptcy when Bill Owens prohibited employees having their dues deducted from their paychecks.) All in all, it was a rather tawdry affair, and for AFSCME Council 76 to come out in favor of screwing public employees out of their pensions by having members of Local 158 of who were hacks from the Denver Democratic Party and Ritter supporters is just reflective of the fact that AFSCME has always placed the interests of the union and the Democratic Party above that of rank and file employees they profess to represent.”

My response:

“As I recall, Miller Hudson, formerly of CAPE also supported SB10-001. This is ironic since Bill Owens eviscerated CAPE financially. Bill Owens is very culpable in the decline of PERA’s funded ratio (selling PERA service credit cheap to encourage the departure of the more ‘expensive’ older employees, i.e., shifting labor costs from Colorado governments to PERA.) Why would Miller Hudson go along with pushing the PERA debt burden onto Colorado PERA retirees when the problem was caused by Bill Owens, and Bill Owens actions harmed CAPE? It doesn’t make sense.”

Former AFSCME official:

“You’d have to ask Miller about that one. Now as far as Colorado WINS goes, well, you have to understand the way union organizers think: Why should they be concerned about the pensions of state employees who were not members of their union? What WINS wants is current state employees, and most of them who have been hired since 2005 don’t have the same pension plan as older state employees, and that is not what they are concerned about: By concentrating on health care costs, and doing away with the inequitable ‘pay for performance’ plan proposed by Penn Pfifner and signed into law by Romer, Colorado WINS needs to play nice with the legislature and the executive branch so that they can market themselves with a ‘victory,’ to the majority of state employees who don’t belong to their organization, or care about somebody else’s pension. So why play the heavy and alienate the incumbent politicians in somebody else’s fight? If you win, well, good. They’ll get up there and say they were with you all the way……”

Quotations of Miller Hudson:

“They will pay their taxes and rely on politicians to keep the promises made to them when they were hired. After 30 or more years, they will rely on their Public Employee Retirement Association (PERA) pensions rather than social security to provide a modest but dignified retirement.”

“In fact, they will shoulder more than 90 percent of the costs of fixing PERA. This isn’t because they haven’t been doing their part. They have.”

“If state employees have learned little else, it should be that when economic times get tough both Democratic and Republican administrations will move swiftly to balance state budgets on their backs.”

“Miller Hudson is a former state representative from Denver who served five years as executive director of the Colorado Association of Public Employees.”

“Taxpayers have been told they will be held responsible for an imminent fiscal catastrophe projected in the tens of billions of dollars. These scare tactics fail to put the true situation in perspective. PERA benefits are much like the mortgage on your house. They will be paid out over the next 30 to 50 years. If Colorado misses a payment — or, more accurately, fails to collect as much as revenue as it should for a year or two — these shortfalls can be remedied in succeeding years. A home mortgage doesn’t become due and payable just because a homeowner loses his or her job. Payments can be made out of savings.”

“For Colorado’s public employers, total contributions into PERA represent about 3 percent of their annual budgets. If this were to be doubled, it would be less than half the current ‘sequester’ cuts being absorbed in the federal budget. PERA is not a fiscal calamity.”

“Unfortunately, when the plan went into surplus during the dot.com boom at the turn of the century, the legislature reduced the state’s contributions, increased the match for refunds paid before normal retirement eligibility and held a fire sale on the purchase of unearned years of service credit at a fraction more than 15 cents on the dollar.”

“Miller Hudson served as executive director of the Colorado Association of Public Employees for six years (2003-10) and helped negotiate the 2007 and 2010 PERA reform bills.”

“It is important to understand why tax credits and exemptions are referred to as tax expenditures. Without loopholes, taxpayers (both individual and corporate) would otherwise pay higher taxes dumping additional moneys into the general fund. Business and special interest lobbyists have understood this relationship for decades. Find a plausible rationalization and then you can begin campaigning for special treatment.”

“Investment returns in the exuberant 1990s had an unfortunate effect. Governments grew lazy about making their regular contributions. And that’s a big reason that they’re in so much trouble now. ‘Defined- benefit plans have been victims of their own success,’ says Steve Kreisberg, AFSCME’s collective bargaining director. ‘They’ve been so successful that some politicians decided that the benefits are free and stopped contributing to the plans.'”

“In Colorado, at least some of Bill Owens’ pension problem was self- inflicted, the result of his pressuring PERA to sell discounted ‘service credits’ to public employees, allowing them to buy more time on the job.” “Owens hoped that state employees would retire early, helping his efforts to streamline government.” “Because pensions are, by their nature, a long-term problem, it’s difficult to get public officials–classic short-term thinkers–to pay them serious attention even when the bills are coming due.”

As I have noted before, I believe that Colorado WINS made a mistake in 2010. What kind of a union casually discards the contracts of its retired members? There is scant precedent for this type of behavior in the history of the U.S. labor movement. This act was clearly immoral and treacherous. It undermines the moral standing of the U.S. labor movement. Public sector unions have done much to improve the working conditions of middle-class Americans over the last century, but advocating the breach of the contracts of their retired union members crosses a moral line.

Rather than conspiring with others to “claw back” the earnings of Colorado’s pensioners, I think that Colorado WINS should be demanding that the Colorado Legislature actually pay its public pension bills. What are these lobbyists doing? For the last decade, they should have demanded that the Colorado Legislature meet its contractual obligations, that the full pension “ARC” be paid. Colorado WINS’ lobbyists should have made these demands before the committees of the Legislature at every opportunity. In every year that the Colorado Legislature failed to make its PERA pension payments and instead appropriated funds to cover local government pension debt that IS NOT the contractual obligation of the State of Colorado, Colorado WINS lobbyists (and previous union lobbyists) should have been there to demand an end to the practice.

As we have seen, the Colorado General Assembly has not paid its full Colorado PERA public pension bill for a decade.

2012 PERA CAFR, page 35 – “ARC Deficiency.”

“In 2012, the actual (PERA) contributions, as set in statute, were $143.4 million less than the ARC as calculated by the actuaries.”

“During the past 10 years, this shortfall in funding . . . has been $3.4 billion.”

“The Colorado Association of Public Employees/Service Employees International Union (CAPE/SEIU); the American Federation of State, County and Municipal Employees (AFSCME); and the American Federation of Teachers (AFT) are joining forces to organize state employees. The new organization will be known as Colorado WINS (Workers for Innovative and New Solutions).”

“In addition, Colorado WINS will have the ‘sole authority to advocate for legislation affecting state employees, including but not limited to legislation affecting PERA [the Public Employees’ Retirement Association], the state personnel system, employee accountability and state employee protections.’”

“Under the agreement, SEIU will provide 50 percent of the budget for Colorado WINS; AFT and AFSCME will provide the rest.”

“The agreement also says that funding contributed by Colorado WINS members for political purposes will be divided, with 50 percent going to SEIU/CAPE and 50 percent to the AFT and AFSCME political funds.”

Colorado PERA active and retired members, help put an end to this travesty. The rule of law will not be abandoned in Colorado, not even with the support of some union officials, party officials, corporations or lobbyists. Contribute at saveperacola.com. Friend Save Pera Cola on Facebook!

In their propaganda supporting the 2010 breach of pension contracts in our state, Colorado PERA administrators have tried to justify (in part) the abrogation of state and local pension contracts by noting the support of public sector unions for the “COLA-taking” bill, SB10-001. As we read on the Colorado PERA website:

“In Colorado, Senate Bill 1 passed with the support of the Colorado Coalition for Retirement Security, which brought together Friends of PERA (which includes PERA members and retirees), the Colorado Education Association, the Colorado School and Public Employees Retirement Association, AFSCME Colorado, the American Federation of Teachers Colorado, the Association of Colorado State Patrol Professionals, the Colorado Association of School Executives, and Colorado WINS.”

I have suggested, in the past, that this support may have been motivated by the fact that active union members (of course) pay union dues, while retired union members no longer contribute to union coffers. Did this economic reality motivate union officials to “toss retirees under the bus” in 2010? Did public sector unions support the taking of PERA retiree assets in order to minimize future PERA contributions that might be needed from their active members? Why did we not see Colorado’s public sector unions insist that Colorado PERA-affiliated employers actually pay their annual pension bills and meet their contractual obligations in 2010?

In a recent article AFSCME (International) writes:

“The very Wall Street-backed politicians who raided and underfunded the pension systems in the first place are now ‘using scare tactics and lavishly funded PR campaigns to cast teachers, firefighters and cops – not bankers – as the budget-devouring boogeymen responsible for the mounting fiscal problems of America’s states and cities,’ he writes.”

“AFSCME, if you really believe this post, why did you allow your affiliate, AFSCME Colorado, to support the breach of Colorado PERA pension contracts in 2010, after the Colorado Legislature had underfunded the pension for a decade? The Colorado Legislature failed to pay its pension bills for a decade, essentially borrowing from the pension fund, now they seek to shift their debt onto the backs of retired public sector workers. It’s sick, but your own people supported this in 2010. Visit saveperacola.com.”

I received a response from a former AFSCME Colorado official:

“Actually Al, that isn’t what happened: The rank and file members of Colorado State Employees AFSCME Local 821 had their local dissolved by a unilateral decision of AFSCME International and the Executive Board of Colorado AFSCME Council 76, prior to the sellout, as they were to be ‘incorporated’ into the Colorado WINS ‘partnership’ created with Ritter: without their consent or even being given the right to vote on the matter. The AFSCME ‘representatives’ who endorsed the PERA plan (i.e. Vivian Stovall and company) weren’t even state employees: they were members of Denver City employees AFSCME Local 158, who aren’t even covered by PERA. The Colorado State AFSCME retirees (Phyliss Zamaripa, Kathy Bacino, and Guy Santo) opposed the PERA plan put forth by Ritter, Schaffer, and Penry at the public hearing where proponents were allowed to testify first, and at length while opponents had their testimony relegated to the end of the hearing, and had their testimony time truncated. So please don’t give the impression that the rank and file members of Colorado State AFSCME Local 821 had anything to do with this sellout, because we didn’t. As the former president of that Local I take umbrage with the disparaging innuendo that we did. Give the credit to where it is due: Give it to Colorado WINS, and the SEIU.”

My response:

“Thanks for this new information. I have noted that Colorado AFSCME supported the PERA pension contract breach since Colorado PERA has made this claim in its propaganda. Al”

And another reply from the former AFSCME official:

“The entire AFSCME endorsement of screwing public employees out of their pension COLA’s in Colorado is unfortunately quite true, however, it should be remembered that AFSCME no longer represents Colorado State Employees, and it hasn’t for about 7 years now. It was decided 7 years ago in a backroom deal in Washington that the three state employee unions would become Colorado WINS. The rank and file members of AFSCME Locals in Colorado were not given the right to vote on this, nor were the members of CAPE or the CFPE. The people who espouse ‘democratic labor trade unionism’ in America, wouldn’t allow it to take place in Colorado. Ritter and company granted a an exclusive franchise to Colorado WINS (which is a subsidiary of SEIU) and Colorado State employees do not have the right to belong to any other union, as both Change To Win and the AFL-CIO have prevented other unions (such as the CWA, which has had a consistent record of fighting for public employees’ pensions) from organizing. Thanks to their betrayal of Colorado State employees, Colorado AFSCME Council 76 is now a bankrupt shell of an organization that represents some county employees in Pueblo, city employees in Aurora, the remnants of Denver City employees Local 535 and 158 and the maintenance staff at DU. They have one ‘assistant Executive Director’ and two clerical workers for a staff. All they are is a paper tiger, shell organization that is used as a conduit to ‘move money’ in state elections.”

“Investment returns in the exuberant 1990s had an unfortunate effect. Governments grew lazy about making their regular contributions. And that’s a big reason that they’re in so much trouble now. ‘Defined- benefit plans have been victims of their own success,’ says Steve Kreisberg, AFSCME’s collective bargaining director. ‘They’ve been so successful that some politicians decided that the benefits are free and stopped contributing to the plans.'”

“In Colorado, at least some of Bill Owens’ pension problem was self- inflicted, the result of his pressuring PERA to sell discounted ‘service credits’ to public employees, allowing them to buy more time on the job.” “Owens hoped that state employees would retire early, helping his efforts to streamline government.” “Because pensions are, by their nature, a long-term problem, it’s difficult to get public officials–classic short-term thinkers–to pay them serious attention even when the bills are coming due.”

As I have noted before, I believe that Colorado WINS made a mistake in 2010. What kind of a union casually discards the contracts of its retired members? There is scant precedent for this type of behavior in the history of the U.S. labor movement. This act was clearly immoral and treacherous. It undermines the moral standing of the U.S. labor movement. Public sector unions have done much to improve the working conditions of middle-class Americans over the last century, but advocating the breach of the contracts of their retired union members crosses a moral line.

Rather than conspiring with others to “claw back” the earnings of Colorado’s pensioners, I think that Colorado WINS should be demanding that the Colorado Legislature actually pay its public pension bills. What are these lobbyists doing? For the last decade, they should have demanded that the Colorado Legislature meet its contractual obligations, that the full pension “ARC” be paid. Colorado WINS’ lobbyists should have made these demands before the committees of the Legislature at every opportunity. In every year that the Colorado Legislature failed to make its PERA pension payments and instead appropriated funds to cover local government pension debt that IS NOT the contractual obligation of the State of Colorado, Colorado WINS lobbyists (and previous union lobbyists) should have been there to demand an end to the practice.

As we have seen, the Colorado General Assembly has not paid its full Colorado PERA public pension bill for a decade.
2012 PERA CAFR, page 35 – “ARC Deficiency.”

“In 2012, the actual (PERA) contributions, as set in statute, were $143.4 million less than the ARC as calculated by the actuaries.”
“During the past 10 years, this shortfall in funding . . . has been $3.4 billion.”

“The Colorado Association of Public Employees/Service Employees International Union (CAPE/SEIU); the American Federation of State, County and Municipal Employees (AFSCME); and the American Federation of Teachers (AFT) are joining forces to organize state employees. The new organization will be known as Colorado WINS (Workers for Innovative and New Solutions).”

“In addition, Colorado WINS will have the ‘sole authority to advocate for legislation affecting state employees, including but not limited to legislation affecting PERA [the Public Employees’ Retirement Association], the state personnel system, employee accountability and state employee protections.’”

“Under the agreement, SEIU will provide 50 percent of the budget for Colorado WINS; AFT and AFSCME will provide the rest.”

“The agreement also says that funding contributed by Colorado WINS members for political purposes will be divided, with 50 percent going to SEIU/CAPE and 50 percent to the AFT and AFSCME political funds.”

Colorado PERA active and retired members, help put an end to this travesty. The rule of law will not be abandoned in Colorado, not even with the support of some union officials, some party officials, corporations or lobbyists. Contribute at saveperacola.com. Friend Save Pera Cola on Facebook!

“Gov. John Hickenlooper has received the names of three nominees to fill the vacancy on the Colorado Supreme Court created by the retirement of the Chief Justice Michael L. Bender, effective Jan. 7, 2014.

The three nominees, certified by the Supreme Court Nominating Commission, are John Dailey, William Hood III and David Prince.

The commission consists of 15 members and includes one attorney and one non-attorney from each of the state’s seven congressional districts plus one additional non-attorney.

By law, the governor must appoint a Supreme Court justice within 15 days after receiving the list.

Dailey serves as a judge on the Colorado Court of Appeals, a position that he’s had since 2000. He has taught as an adjunct law professor at University of Colorado and University of Denver schools of law. He also worked for the Colorado attorney general’s office in multiple capacities.

Hood is a district court judge in the Second Judicial District (City and County of Denver), a position he’s had since 2007. He is also an adjunct professor at DU’s Sturm College of Law. Hood was in private practice at Isaacson Rosenbaum P.C., where he was a shareholder from 2005 to 2007, and of counsel in the litigation department from 2003 to 2005. Prior to private practice, Hood worked for the Office of the District Attorney for the 18th Judicial District (Arapahoe, Douglas, Elbert, and Lincoln counties) from 1998 to 2003 and 1992-1997.

Prince is a deputy chief district court judge in the Fourth Judicial District for El Paso and Teller counties. He was appointed as a district court judge in 2006. Before taking that position, Prince was an associate and then a partner at Holland & Hart from 1992-2006 with a focus on complex civil litigation.”

P.S., Save Pera Cola supporters: In 2010, when Colorado PERA retiree pension contracts were broken by the Colorado Legislature, this breach of contracts was supported by both Democrats and Republicans. Recall that a Democrat and a Republican were “co-prime” sponsors of SB10-001. Colorado PERA administrators have pointed out, on many occasions, that the PERA pension contract breach was “bipartisan,” as if this fact somehow forgives, diminishes or justifies the abrogation of the contracts of the State of Colorado and Colorado local governments. At the time of the breach, some members of both parties, Democrat and Republican, also defended the fully-vested public pension contracts of Colorado PERA retirees. So, clearly the Colorado PERA pension contract breach is not a “partisan” matter.

The 2010 PERA COLA pension contract breach transcended parties and politics. Members of both major parties were persuaded by lobbyists to attempt the illegal “debt-shift” from Colorado governments to PERA retirees. The 2010 PERA pension contract breach is affront to the Colorado Constitution, and to the rule of law in Colorado.

In a recent article, I unfortunately lost my focus and lapsed into party politics. My goal in that particular article was to send a message to the Colorado Democratic Party regarding the 2010 PERA contract breach, and to raise awareness in the party of the fact that the Democrats who supported the PERA pension contract breach in 2010, in addition to violating the Contract Clause, also violated the Democratic Party’s own party platform. (Over my many years in Colorado I have been registered as both a Republican and as a Democrat, and I have been an Independent. I’m currently a moderate Democrat.)

In the future, I will try to again focus on exposing the “crime” of the PERA COLA taking and pension contract breach in a non-partisan manner. Al